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Colocation is the strategy of businesses deploying their own IT equipment but hosting it in data centers run by third-party vendors. Using colocation is a convenient way for businesses to access the benefits of private data centers without the challenges of running them.
In a colocation arrangement, the business is responsible for deploying and managing its own IT equipment (such as servers). The vendor is responsible for deploying and managing all the infrastructure needed to host this equipment. Most colocation vendors will also offer value-add services such as managed IT services, IT support and remote hands support.
Typical use cases for colocation include:
Disaster recovery: Colocation is ideal for disaster recovery solutions, providing a safe, offsite location for backups and critical systems.
Hybrid IT strategies: Businesses that want to mix cloud-based services with on-premises infrastructure often use colocation as part of their hybrid IT architecture.
High volume applications: Using in-house processing for applications that generate significant volumes of traffic is often much more economical than using public clouds.
There are two primary types of colocation services. These are retail colocation and wholesale colocation. Here is an overview of the key characteristics of both options.
Retail colocation is geared towards smaller businesses that only need (relatively) small quantities of IT equipment but still want the benefits of professional-grade infrastructure.
Key features of retail colocation include the following.
Small rental areas: In retail colocation, businesses typically lease by the rack unit (U), half rack, or full rack. Some businesses may rent cages but this is typically the upper end of what would be considered retail colocation.
Shared power and cooling: Power, cooling, and network infrastructure are shared with other tenants in the data center. Colocation vendors do, however, ensure that there are enough resources to go around. This means that tenants are not left competing for resources the way they may be in the cloud.
Scalability: With retail colocation, it is relatively straightforward for businesses to scale incrementally by adjusting the amount of rack space (or cages) they use. This applies to both upward and downward scaling.
Managed services and/or support: Most colocation vendors offer some level of managed services and/or IT support. These services are particularly relevant to retail clients as they tend to have less in-house IT expertise.
Typical use cases for retail colocation are:
Small to medium-sized businesses with limited IT hardware.
Enterprises seeking disaster recovery or backup infrastructure.
Wholesale colocation is geared towards larger organizations with significant IT infrastructure requirements. Essentially, it enables businesses to treat colocation facilities as though they really were in-house data centers but still have a colocation vendor on hand.
Key features of wholesale colocation include the following.
Large rental areas: In wholesale colocation, clients lease entire data center halls or significant portions of a facility. At a minimum, they would be expected to lease a whole room.
Customizable infrastructure: Because wholesale colocation provides clients with large, dedicated spaces, clients have extensive scope to customize their own infrastructure. For example, they could implement high-power-density infrastructure and/or super-high-bandwidth network connections. This would allow them to run the most demanding hardware for the most demanding applications.
Highest levels of security: The fact that all colocation tenants have their own equipment in their own defined spaces means that it is inherently more secure than public clouds. Wholesale colocation offers the very highest levels of security as wholesale tenants have complete isolation from other tenants in their own dedicated spaces. They can secure these however they wish.
Customized contracts: Wholesale colocation tenants make a significant commitment towards their colocation vendor. The vendor is likely to recognize this and reciprocate with highly favorable contracts. These will typically offer low per-unit pricing for resources such as power and network connectivity. They may also offer a high level of support (for example ultra-short SLAs).
Typical use cases for wholesale colocation are:
Large enterprises with significant server demands.
Cloud service providers looking for dedicated data center space.
Here are the five main advantages of colocation for business.
With colocation, each client’s data stays on its own hardware. Nobody will have access to that data unless the client explicitly grants it to them (not even the colocation vendor). Moreover, the client’s hardware will stay in its own defined area of the colocation facility. It can therefore be physically secured to stop unauthorized parties from tampering with it.
Each client’s own, secured, area will form part of a larger data center facility, which will itself implement the highest levels of security. This security will cover accidents (such as fire) as well as malicious activities (such as physical attack).
Like public cloud service providers (CSPs), colocation vendors typically provide contractually-enforceable uptime guarantees. The modern standard is a minimum of “five nines” (99.999% uptime). Some vendors go beyond this and guarantee 100% uptime.
Colocation vendors ensure they can meet these guarantees by implementing high levels of redundancy in all key infrastructure. They couple this with robust monitoring, maintenance and upgrading programs. This ensures that problems are averted as much as possible and resolved promptly when they do occur.
With colocation, businesses maintain complete control over their own hardware and software configurations. This control allows companies to optimize their equipment for its designated purpose. It therefore helps to maximize efficiency and, hence, minimize cost.
The ability to customize hardware and software can have additional benefits. For example, some software vendors use licences that tie their software to specific hardware. This effectively means that you can only use the software if you can specify the hardware on which it is run.
Having control over your hardware also gives clients free rein to deal with any hardware-related security issues (immediate or potential). They do not have to accept a cloud vendor’s choice of solution. They can just decide for themselves what they want to do and act on their decision according to their own timescale.
Using colocation spares businesses the upfront expense of building or buying a data center. This means that businesses can immediately get the financial benefits of bringing their core processing in-house. Retail colocation tenants are also likely to benefit from the economies of scale unlocked by sharing infrastructure costs with other tenants.
As a bonus, the fact that the costs of colocation are typically fixed means that it’s straightforward to budget for them. By contrast, budgeting for public cloud usage can be much more complicated even with committed tariffs.
Although colocation does not provide the on-demand scalability of the cloud, it is still relatively easy for clients to adjust the amount of resources they use. This is particularly true in retail colocation where allocations can be changed in very small increments. The scalability of colocation facilities enhances their cost effectiveness since it means that businesses can quickly and easily adjust their provisioning to reflect their demand.
Here are five factors to consider to ensure that you choose the right colocation provider.
Having a data center located close to your users/customers will help to minimize latency. If you intend to manage your equipment yourself, it’s preferable if the data center is also near to your business. As well as looking at geographical distance, look at the practicalities of physically reaching the facility.
The easiest way to evaluate security measures is to ask the provider what frameworks and standards they support. Evaluating a provider’s security is also a good opportunity to find out what help they can give you to achieve and maintain your own compliance certification.
The provider should offer scalable and flexible solutions that adapt to your business. In addition to being able to adjust their infrastructure, you should also be able to update your contract terms as your business develops.
Check that the provider runs a carrier-neutral facility. This means that you have total liberty to choose your own network service provider(s). Also check the quality of their infrastructure and, in particular, the extent of their redundancy.
Confirm the provider’s tier rating from the Uptime Institute. Double-check this by enquiring about the level of redundancy they implement. Also, look closely at the provider’s Service Level Agreements (SLAs) and general reputation for customer support.
The answer to the question “Colocation vs cloud hosting: which is better?” is that it depends on your use case.
Colocation is better than cloud hosting in the following situations.
For high-volume, predictable workloads: The more data you process, the more economical colocation is likely to be in comparison to cloud hosting.
For the highest levels of security: Colocation enables businesses to keep their own data on their own equipment in their own space. This is simply not possible with cloud hosting.
For customization: The fact the businesses use their own equipment means that they have full control over its configuration. This level of control is not possible with cloud hosting.
For low-volume, dynamic workloads: Although using colocation is much simpler than building and running a data center, it’s still unlikely to be a viable option for low-volume and/or dynamic workloads. Cloud hosting is likely to be the only practical option for these.
For speed: With cloud hosting, resources can be added and removed literally in a few clicks. When businesses need resources quickly, therefore, cloud hosting is likely to be a far better option than colocation.
For convenience: Some businesses just want to be able to use IT resources without the hassle of having to manage them in any way. This is exactly what cloud hosting offers.
Case studies: success with colocation
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